Questions from Federal Taxation

Q: Pursuant to a complete liquidation in the current year, Scarlet Corporation

Pursuant to a complete liquidation in the current year, Scarlet Corporation distributes to Jake land (basis of $425,000, fair market value of $390,000) that was purchased three years ago and held as a...

Q: The stock of Magenta Corporation is owned by Fuchsia Corporation (95

The stock of Magenta Corporation is owned by Fuchsia Corporation (95%) and Marta (5%). Magenta is liquidated in the current year, pursuant to a plan of liquidation adopted earlier in the year. In the...

Q: The stock in Ivory Corporation is owned by Gold Corporation (80

The stock in Ivory Corporation is owned by Gold Corporation (80%) and Imelda (20%). Gold Corporation purchased its shares in Ivory nine years ago at a cost of $650,000, and Imelda purchased her shares...

Q: The trend in state income taxation is to move to an apportionment

The trend in state income taxation is to move to an apportionment formula that places extra weight on the sales factor. Many states now use sales-factor- only apportionment. Explain why this developme...

Q: Orange Corporation purchased bonds (basis of $350,000)

Orange Corporation purchased bonds (basis of $350,000) of its wholly owned subsidiary, Green Corporation, at a discount. Upon liquidation of Green pursuant to § 332, Orange receives payment in the for...

Q: On July 22, 2016, Lilac Corporation purchased 25% of

On July 22, 2016, Lilac Corporation purchased 25% of the Coffee Corporation stock outstanding. Lilac Corporation purchased an additional 40% of the stock in Coffee on March 24, 2017, and an additional...

Q: Warwick, Inc., a U.S. corporation, owns

Warwick, Inc., a U.S. corporation, owns 100% of NewGrass, Ltd., a foreign corporation. NewGrass earns only general limitation income. During the current year, NewGrass paid Warwick a $10,000 dividend....

Q: On April 27, 2017, Auk Corporation acquires 100% of

On April 27, 2017, Auk Corporation acquires 100% of the outstanding stock of Amazon Corporation (E & P of $750,000) for $1.2 million. Amazon Corporation has assets with a fair market value of $1.4 mil...

Q: The Open Museum is an exempt organization that operates a gift shop

The Open Museum is an exempt organization that operates a gift shop. The museum’s annual operations budget is $3.2 million. Gift shop sales generate a profit of $900,000. Another $600,000 of investmen...

Q: Quail Corporation was created six years ago through contributions from Kasha ($

Quail Corporation was created six years ago through contributions from Kasha ($900,000) and Frank ($100,000). In a transaction qualifying as a reorganization, Quail exchanges all of its assets current...